Background
By the spring of 1942, despite the failure of Operation Barbarossa to decisively defeat the Soviet Union in a single campaign, the war had been progressing well for the Germans: the U-Boat offensive in the Atlantic had been very successful and Rommel had just captured Tobruk. In the east, they had stabilized their front in a line running from Leningrad in the north to Rostov in the south. There were a number of salients in the line where Soviet offensives had pushed the Germans back (notably to the northwest of Moscow and south of Kharkov) but these were not particularly threatening. Hitler was confident that he could master the Red Army after the winter of 1941, because even though Army Group Centre (Heeresgruppe Mitte) had suffered heavy punishment west of Moscow the previous winter, 65% of its infantry had not been engaged and had been rested and re-equipped. Army Groups North and South had also not been particularly hard pressed over the winter. Stalin in turn, had just issued his "not a step back" order after the Red Army had suffered losses of 259% of their initial strength in 1941 and was expecting the main thrust of the German summer attacks to again be directed against Moscow.
The German summer offensive in the south of the Eastern Front was driven by two main objectives — time and material resources. Hitler was adamant to complete the offensive before the might of the United States joining the war came into play and secondly, he was determined to secure the oil resources in the Caucasus, which would deny them to the Soviet Union while securing an alternative petroleum resource for Germany.
The Soviets realized that they were under tremendous constraints of time and resources and ordered that anyone strong enough to hold a rifle be sent to fight. At this stage of the war, the Red Army was less capable of highly mobile operations than the German Army. However, combat in large urban areas tends to be dominated by small arms weaponry rather than armored and mechanized units, much to the detriment of the German forces who were principally trained and experienced in fast-moving panzer led operations.
Read more about this topic: Battle Of Stalingrad
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